The following graph shows the relationship between price and quantity at three points. Which one of the following is the correct label for the sloping line joining the three points?
A)Contribution
B)Elasticity
C)Demand
D)Profit

Question

The following graph shows the relationship between price and quantity at three points.  Which one of the following is the correct label for the sloping line joining the three points?
A)Contribution 
B)Elasticity 
C)Demand 
D)Profit

Quizplus · Accepted Answer

The sloping line joining the three points represents the relationship between price and quantity demanded, which is the definition of demand. Therefore, choice C is the correct label for the line. Contribution and profit are related to a firm's revenues and costs, while elasticity measures the responsiveness of quantity demanded to changes in price.

The Following Graph Shows the Relationship Between Price and Quantity